S&P Action Off Of Greenspan’s Comments

T-bond futures

Short-term perspective: The March contract [USH9>USH9] rallied back after two days of losses
partly due to a stronger dollar and optimism over Fed Chairman Alan Greenspan’s testimony
tomorrow. We were looking to buy today at the 122 16/32 level but never got the

Long-term perspective: Bonds remain in their downtrend amid worries of a
stronger U.S. economy. We’re still short the March contract with stops in at the 125

Currency futures

Short-term perspective: The dollar responded well to the G7
meeting this weekend, at which finance ministers made favorable remarks supporting a stronger
U.S. currency. This put additional pressure on the March D-mark [DMH9>DMH9] and Japanese yen

At this point, though, we feel the
market has already discounted this information, so we went long near the close in the March
D-mark around the 5650 level. We’re looking for a bounce to the 5725 area in the
next two sessions.

Long-term perspective: Because the longer-term outlook still favors a stronger U.S. economy,
we’re still short the D-mark and the Japanese yen.

S&P 500 futures

Finally, some action! The March futures [SPH9>APH9] rallied strongly today in positive
anticipation of Greenspan’s testimony. However, I sensed a little too much
optimism in the
market today, and
thus established a short position around the 1272 level.

In the past, Greenspan has made remarks that have tempered the market’s bullishness, and I
think he will do it again tomorrow, triggering a sell-off tomorrow or
the next day. We have stops in around 1290, which means we only put on half our
normal trade size to accommodate the wider stop level.

Next scheduled update: Wednesday, February 24, 1999

(Check “Today’s Schedule” every day on our home page to find out about additional updates.)